Buffett not so sage after S&P outclasses him

Michael Bow is a reporter at City A.M. covering private equity, funds, investments and asset managers. He can be reached on michael.bow@cityam.com

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Michael Bow

STOCK picking guru Warren Buffett failed to beat America’s S&P 500 again last year, marking the first time he has lost to the index over a five-year period since he started in 1965, results show.

Buffett’s Berkshire Hathaway saw its book value per share rise by 18.2 per cent in 2013, while the S&P 500 rose 32.4 per cent over the same period.

Over five years between 2008 and 2013 the S&P index has risen 128 per cent and Berkshire has risen 91 per cent – the first time in Buffett’s 49-year investment career the index has beaten him over the long term.

“We expect to fall short, though, in years when the market is strong – as we did in 2013,” Buffett said in his closely watched letter to shareholders released on Saturday.

“We have underperformed in 10 of our 49 years, with all but one of our shortfalls occurring when the S&P gain exceeded 15 per cent.”

Buffett is widely considered the greatest investor of the modern era, making a return of 693,518 per cent between 1964 and 2013 versus the S&P 500 which has 9,841 per cent.

The results also show Buffett slashed his stake in Tesco last year by selling 115m shares in the company. He remains a big shareholder though, with a 3.7 per cent stake.

Overall Berkshire Hathaway made $19.5bn (£11.6bn) of profit versus $14.8bn in 2012, a record for the business.